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DATE

Wednesday, Aug. 5, 2026 at 9:00 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer and Member of the Executive Committee - Milton Maluhy Filho
• Officer and Member of the Executive Committee - Gabriel Amado de Moura
• Group Head of Investor Relations - Gustavo Rodrigues

TAKEAWAYS

• Recurring Managerial Result -- BRL 12.4 billion, representing growth of 7.8% compared to the same period last year and 1% compared to the previous quarter.
• Return on Average Equity -- 24.3% on a consolidated basis and 25.7% in Brazil, reflecting consistent profitability levels.
• Total Credit Portfolio -- BRL 1.522 trillion, an increase of 9.6% year over year and 2.7% quarter over quarter.
• Common Equity Tier 1 Ratio -- 12.3%, an increase of 30 basis points compared to March 2026.
• Financial Margin with Clients -- BRL 32.6 billion, growing 3.3% quarter over quarter and 5.1% year over year.
• Risk-Adjusted NIM -- 6.2% consolidated and 6.7% in Brazil, driven by disciplined portfolio management and asset spreads.
• Mortgage Loan Portfolio -- BRL 152.2 billion, growing 13.3% year over year and surpassing the credit card portfolio in total volume.
• SME Loan Portfolio -- BRL 307.4 billion, increasing 11.6% year over year, supported by government-backed program growth.
• Large Company Loans -- BRL 474.9 billion, representing growth of 10% year over year and 4.4% quarter over quarter.
• Payroll Loan Portfolio -- BRL 81.3 billion, growing 11.7% year over year, with private payroll loans expanding 14.3% in the quarter.
• Financial Margin with the Market -- BRL 900 million, reflecting solid risk management despite financial market volatility.
• Noninterest Expenses -- BRL 16.7 billion, growing 3.1% year over year, which tracked below inflation and collective bargaining adjustments.
• Efficiency Ratio -- 37.4% on a consolidated basis and 35.5% in Brazil, representing improvements of 10 to 30 basis points over the prior year.
• Insurance, Pension, and Premium Bond Results -- BRL 3.1 billion, increasing 8.7% year over year due to consistent growth in core insurance operations.
• Advisory Services and Brokerage Revenue -- BRL 1.3 billion, representing 32.5% year-over-year growth driven by fixed income transactions.
• Asset Management Revenue -- BRL 2.0 billion, up 7.3% year over year despite lower performance fees during the quarter.
• NPL 90 Days Ratio -- 1.9% consolidated, remaining stable quarter over quarter despite a 10 basis point increase in the individuals portfolio.
• SME NPL Ratio -- 2.0%, up from 1.9% in the prior quarter, with management forecasting a rise to 2.1% as government program grace periods expire.
• Cost of Credit -- BRL 10.1 billion, or 2.7% of the total portfolio, reflecting stability in credit quality across segments.
• Desenrola Program Impact -- BRL 60 million on the cost of credit, which management categorized as immaterial to the overall financial results.
• Commission and Fees Guidance -- Revised to a growth range of 2% to 5%, down from the initial 5% to 9% range to reflect current economic activity levels.
• Total Assets -- BRL 3.227 trillion, increasing 11.3% compared to the same period of the previous year.

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RISKS

• Maluhy Filho stated, "The level of indebtedness among both companies and households in a restrictive interest rate environment requires caution," regarding potential pressure on the credit cycle.
• Maluhy Filho noted, "We should still experience an additional quarter of increases, particularly in NPL over 90 days," in the SME segment due to the mechanical effect of government-backed program grace periods ending.
• Maluhy Filho stated that the bank incurs "costs associated with capital index hedge ratio" as part of its strategy to protect the capital position and enhance earnings predictability.

SUMMARY

Management reported that Itaú Unibanco Holding S.A. (ITUB -4.82%) delivered consistent profitability with a consolidated ROE of 24.3% and recurring net income of BRL 12.4 billion. The credit portfolio grew to BRL 1.522 trillion, led by collateralized products such as mortgages and private payroll loans, while the firm continued to derisk its unsecured credit card exposure. Management noted that noninterest expenses remained well controlled, growing 3.1% year over year, while the efficiency ratio in Brazil improved to 35.5%. Guidance for fee income was revised downward to reflect moderated economic activity, though the company maintained its outlook for the total loan portfolio and cost of credit.

• Management noted that the mortgage portfolio surpassed the credit card portfolio for the first time, reaching BRL 152.2 billion compared to the BRL 150.4 billion credit card balance.
• CEO Maluhy Filho stated, "Generating a very high margin only to give it back through credit costs is not a sensible capital allocation strategy," highlighting the bank's focus on risk-adjusted NIM.
• The company reported that 70% of migrated clients now use at least three products, supporting a strategic focus on increasing customer lifetime value and reducing friction.
• Maluhy Filho indicated that the 18-point competitive NPS gap with digital leaders has closed, following multiyear investments in cloud and digital transformation.
• The bank announced the acquisition of Solana Capital, an independent fund manager specializing in equities, to expand its Multimesas investment platform.
• Management confirmed that the Desenrola debt-refinancing program reached 371,000 clients with BRL 1.1 billion in renegotiated loans but only a two basis point impact on delinquency indicators.
• Maluhy Filho described the guidance adjustment for fee and insurance income to a 2% to 5% range as the "most prudent course of action" based on observed market trends.

INDUSTRY GLOSSARY

• Bancassurance: An arrangement in which a bank and an insurance company form a partnership so that the bank can sell the insurance company's products to its client base.
• CET1 (Common Equity Tier 1): A measurement of a bank's core equity capital compared with its total risk-weighted assets, used as a key indicator of financial strength.
• Desenrola Program: A Brazilian federal government program launched to facilitate the renegotiation of consumer debts for individuals and small businesses.
• LCR (Liquidity Coverage Ratio): A requirement that financial institutions hold enough high-quality liquid assets to survive a significant 30-day stress scenario.
• Multimesas Model: A management structure used by Itaú Asset that brings together independent investment teams on a single platform for infrastructure and risk management.
• NIM (Net Interest Margin): The difference between the interest income generated by a bank and the amount of interest paid out to its lenders, relative to its assets.
• NPL 90 (Nonperforming Loans over 90 Days): Loans that are more than 90 days past due, typically used as a primary indicator of credit quality deterioration.
• NSFR (Net Stable Funding Ratio): A liquidity standard designed to ensure that banks have enough stable funding to cover their long-term assets.

Full Conference Call Transcript

Gustavo Rodrigues: [Foreign Language]. Simply click on the flag icon located in the upper left corner of your screen. Questions can also be submitted via WhatsApp to the number displayed on your screen. Today's presentation is available for download on both our hot side and as always, on our Investor Relations website. With that, I will now hand you over to Milton, and we will reconvene later for the Q&A session. Milton, over to you.

Milton Maluhy Filho: Good morning. Welcome to another earnings release as we discuss our second quarter 2026 results. You will see an executive presentation focused on the key drivers of our results, with the objective of leaving ample time for our traditional Q&A session, we delivered a strong quarter with consistent results, high profitability and excellent credit quality indicators very much in line with the consistency we have been delivering over recent quarters. Let's move directly to the numbers. This quarter, we delivered recurring net income of BRL 12.4 billion. representing growth of 7.8% compared to the second quarter of last year and of 1% compared to the previous quarter. This was, therefore, another very solid result. How does this translate into profitability?

On a consolidated basis, ROE reached 24.3% and while in Brazil, it reached 25.7%. As always, we also present profitability adjusted to a CET1 capital ratio of 11.5%, which is close to where we believe the market operates and is also our minimum capital appetite threshold on this basis, Consolidated ROE would have reached 25.1%, while ROE in Brazil have reached 26.7%. This is perhaps the most comparable metric across earnings releases, and it demonstrates our ability to generate strong returns not only in Brazil, but also on a consolidated basis. Turning to the loan portfolio. We posted healthy growth, reaching BRL 1.522 trillion, up by 2.7% quarter-over-quarter and by nearly 10% year-over-year.

This reflects our ability to grow with quality, supported by sound portfolio dynamics and disciplined capital allocation. Moving on to NII with clients. We also delivered a very solid result of 32.6 billion an increase of 3.3% compared to the first quarter of 2026 and a 5% compared to the second quarter of 2025. It is important to highlight this acceleration, results are very solid, and I will provide more detail shortly. Moving to noninterest expenses. Growth remained well under control at 3.1% year-over-year.

It is worth remembering that we have been investing continuously for many years. always with a long-term perspective, these figures demonstrate not only our ability to continue investing in the business with quality but also our ability to pursue efficiency wherever it needs to be found on a daily basis. This reflects strong cost discipline across the organization. All of this has translated into a common equity Tier 1 ratio of 12.3%, once again demonstrating a very solid and high-quality capital base with an increase of 30 basis points compared to March.

It is worth remembering that we did an early dividend distribution at the end of last year, which meant that we entered 2026 with a highly optimized capital position. We also had the regulatory phase-in effects, which still had an impact during the first quarter, and yet we continue to generate capital with strong quality. I will return to this topic in more detail later in the presentation. Turning back to the loan portfolio. I will walk through the figures from the bottom up as that may be easier to follow. In Brazil, the portfolio grew by 9.6% year-over-year and 2.6% quarter-over-quarter, which is very healthy growth.

Large companies posted growth of 10% year-over-year and 4.4% quarter-over-quarter, once again reflecting strong discipline in capital allocation and expected returns. These are very long-term balance sheet transactions, which makes disciplined capital allocation, particularly important. Next, let me provide more details, starting with micro, small and medium-sized companies. We posted healthy growth of 1.5% in the quarter and 11.6% year-over-year. More important than growth itself, however, is the quality and risk profile of this portfolio. The portfolio of government-backed programs grew by 7.2% in the quarter while originations increased by 47.3% over the same period. Once again, this reflects our discipline in delivering the best products under the best conditions while maintaining strong risk management and capital allocation standards.

Payroll lending has continued to be a very important growth driver for us, particularly private payroll loans under the new product. The overall payroll loan portfolio grew by 3.5% in the quarter and 11.7% year-over-year. When we take a closer look at private payroll loans, the portfolio expanded by 14.3% in the quarter and 9.1% year-over-year. From the outset, we were able to capitalize on this opportunity very effectively. Delivering value to our clients while generating strong and consistent growth with delinquency remaining fully under control. This also affects the dynamics of our personal lending portfolio.

Since for clients who are eligible for private payroll loans, particularly formerly employed workers, we have increasingly prioritized this product over traditional unsecured personal lending due both to its pricing advantages and its priority in the repayment structure. Finally, turning to mortgage lending. It is important to remember that our funding structure is differentiated relative to the market, enabling us to remain highly competitive in this segment while serving our clients effectively and allocating resources efficiently. The mortgage portfolio grew by 3.9% in the quarter, and by 13.3% year-over-year, reaching BRL 152 billion.

In fact, the mortgage portfolio has now surpassed our credit card portfolio, which has historically been one of our most important portfolios at approximately BRL 150 billion Mortgage lending is a long-term product that fosters strong client loyalty and reciprocity, which is why this strategy is so important for us. Today, the largest private sector bank in this segment with BRL 36 billion in originations over the last 12 months and a 55% market share among private banks. Once again, this demonstrates how our funding structure, our clients' investment profile and our funding capacity allow us to sustain a mortgage portfolio at these levels. Now let me turn to NII with clients and highlight 2 points.

First, total NII increased by BRL 1.1 billion, representing growth of 3.3% in the quarter, including working capital and other effects. We posted growth in the working capital and other categories in addition to the impact of investment rates and we're able to monetize our capital very effectively, reaching 3.9 billion in working capital during the quarter. When we look at core NII, we see growth of BRL 800 million or 2.9% in the quarter, broadly distributed across all components. Average volumes contributed positively. Product mix was broadly neutral for margins. liability margins and asset spreads were slightly positive. And we also benefited from a calendar effect as this quarter had 1 additional calendar day, which positively affected liabilities.

Latin America and other also contributed positively. So as I mentioned, this was a broadly distributed result, demonstrating our ability to generate core NII alongside an effective strategy for monetizing working capital and supporting the bank's capital generation. When we translate NII into margin percentages, particularly risk-adjusted NIM, which is the way we manage the balance sheet, we have positive news to share. As I always say, generating a very high margin only to give it back through credit costs is not a sensible capital allocation strategy. What we have shown consistently is our ability to manage margins with discipline and consistency.

Risk-adjusted NIM reached 6.2%, representing a slight increase of 10 basis points in the quarter on a consolidated basis. The same dynamic was observed in Brazil, where NIM increased from 6.6% to 6.7%. The reflecting our disciplined portfolio management and delivering very solid results. Therefore, this is very positive news on the margin front. Turning to NII with the market. although results may appear stable compared to previous periods, I believe that we are all aware of all the challenges we have been facing in financial markets and the level of volatility we have experienced, both in local and global markets. Even so, we delivered another solid quarter, supported by consistent risk management.

This discipline and the quality of the results we deliver are extremely important. As a result, NII with the market reached BRL 900 million. We also continue to incur costs associated with capital index hedge ratio. But as part of our strategy to protect our capital position and enhance earnings predictability, we continue to believe that this remains the appropriate approach for the bank's balance sheet, even considering this cost delivered a very solid performance in NII with the market. Turning to commissions, fees and results from insurance. I will once again comment on the figures from the bottom up.

You will see that results from insurance, pension plans and premium bonds increased by 8.7% year-over-year and 12.8% and compared to the first half of 2025. Our core insurance operation continues to grow very consistently on both a quarterly and year-over-year basis have delivered many consecutive quarters of growth with results at a substantially different level compared to 5 years ago, reflecting very strong progress. Moving on to advisory services and brokerage. Revenues increased by 32.5% year-over-year and by 25.3% in the first half compared to the same period last year. This line is largely composed of fixed income transactions, and our approach has been one of strict capital allocation and risk discipline.

As a result, many of these transactions are ultimately retained on our balance sheet and what we evaluate is the expected return profile, ensuring that returns remain consistent and aligned with our cost of capital while also carefully assessing the type of risk we are retaining over the long term, considering both fixed income market pricing dynamics and credit risk. Therefore, we remain very comfortable with the quality of the assets that have been retained on our balance sheet. Moving on to Asset Management. Revenues grew by 7.3% year-over-year. More importantly, despite not being an exceptional quarter for performance fees, we still achieved 11.0% growth in the first half compared to the same period last year.

There are some lines that we deliberately continue to disclose particularly current accounts for individuals, which declined both in the quarter and year-over-year to demonstrate that this is precisely the direction we expect. We have been redefining our current account packages in an effort to serve clients more effectively while simultaneously increasing customer lifetime value and reducing friction in our customer relationships. This is why we continue to disclose this line separately, providing visibility into the significant transformation taking place in our revenue mix, with revenues becoming increasingly more sustainable, higher quality and supportive of greater customer lifetime value. Revenues from card issuance are closely linked to the risk profile of the portfolio we have been originating.

Over the last years, we carried out a very significant derisking process today, we operate a portfolio with delinquency levels that are substantially below market averages, roughly half of the system levels while delivering quality growth and double-digit expansion in the target segments where we have chosen to grow. Therefore, we are very satisfied with the quality of the results we have achieved. That said, as I mentioned previously, we have observed some moderation in this line throughout the year as a function of economic activity levels. I will discuss our guidance later on, but this is the line where we are making an adjustment.

As I have mentioned in previous quarters, we already saw some risk that performance could trend closer to the lower end of the range. Therefore, we believe it was prudent to revise our full year growth expectations this quarter. I will provide more details on this adjustment shortly. Turning to credit quality. We delivered another quarter of strong consistency. Looking at Brazil, consolidated NPL 15 to 90 days remained stable and fully in line with the previous quarter. In Brazil, the individual's portfolio also remained stable at approximately 3.0%. In SMEs, we saw a slight increase, fully consistent with what I have been discussing over recent quarters.

We continue to expect normalization of this indicator with the gradual stabilization of the grace periods associated with government-backed programs, which, as I previously showed are highly relevant within our portfolio now approaching the end of these grace periods. We should still experience an additional quarter of increases, particularly in NPL over 90 days, which I will discuss in greater detail shortly. Looking at long-term delinquency. The overall indicator remained stable as did Brazil's indicator this quarter. These are very positive developments for cost of credit, particularly in an environment with household indebtedness increasing household leverage rising and interest rates remaining restrictive.

Even under these conditions, we have been able to navigate the cycle with a high degree of discipline and consistency. Looking specifically at Brazil, the delinquency in the individuals portfolio increased slightly by 10 basis points but we have absolutely no concerns regarding this portfolio. I also wanted to provide greater transparency regarding the impact of the [indiscernible] program. We had 371,000 clients impacted and BRL 1.1 billion in renegotiated loans but the effect on our indicators was immaterial. To put this into perspective, the impact on cost of credit was BRL 60 million during the quarter, while the impact on the delinquency indicator was only 2 basis points. Why am I highlighting this?

Because we achieved a 12% market share in this program. When the program was launched, our expectation was to operate with approximately 10% market share. We performed somewhat better than expected, although the target customer profile consisting of individuals earning up to 5 minimum wages is not necessarily the primary focus of our portfolios. The key message, however, is that our risk management framework continues to perform with a very high level of quality regardless of any specific program. In this particular case, the effect on our indicators was immaterial.

This is the indicator I mentioned earlier, with SMEs increasing from 1.9% to 2.0%, we are still operating at levels that are significantly below those observed in the past when this indicator ranged between 2.3% and 2.5%, and that is only natural. However, there is a mechanical effect related to the expiration of grace periods as government-backed programs mature. Previously, we benefited from these grace periods as the denominator grew significantly without any impact on the numerator. As these grace periods begin to expire, we naturally see this increase in the indicator.

Our best estimate is that this indicator should increase by another 10 basis points next quarter, reaching approximately 2.1% in which remains well below levels observed not so long ago, such as in September 2024. It is important to remember that the market is dynamic, but our current expectation is for this indicator to stabilize at around 2.1% over the coming quarters. Once again, this reinforces the fact that we are looking at a mechanical effect and not a source of concern despite all the challenges we have been observing in the market. Therefore, delinquency indicators continue to provide very positive news. Regarding the portfolio by stages, I do not have any major highlights here.

Stage 2 and Stage 3 portfolios remain broadly in line with expectations However, I would like to draw your attention to the Stage 2 coverage ratio, particularly the reduction observed this quarter in the company's portfolio. It is important to note that we do not manage the business by stage classification. Our management approach is based on expected loss. Therefore, if you compare the sum of short-term delinquency NPL 15 to 90 days plus NPL over 90 days with the share of the portfolio classified in each stage, you will notice that stage allocations are substantially higher.

What happens is that, particularly in wholesale, when there are migrations from Stage 2 to Stage 3 or from stage 1 to stage 2, these effects become visible. This quarter, we experienced migrations of clients from stage 2 to stage 3. Typically, clients leave Stage 2 with a relatively high level of coverage when they are ready to migrate. And this affects the overall coverage ratio. Once again, this is essentially a mechanical effect that is fully accounted for in our projections and in our cost of credit, which I will discuss shortly. There is no specific issue behind this movement. In the MD&A, you will find the breakdown by retail and wholesale segments.

But this remains a purely mechanical effect with no cause for concern. It simply reflects the natural migration of clients between stages, all of whom already had adequate provisioning levels. Turning to cost of credit. You can see remarkable stability in this series from the first quarter of 2025 through today with cost of credit running at 2.7% of the portfolio throughout the period. This is an impressive level of stability. Naturally, nominal figures increase as the portfolio grows, which is why it is important to compare nominal growth in credit costs against the growth of the portfolio itself. That is exactly what we have observed. Cost of credit recorded only a slight increase, reaching BRL 10.1 billion.

As I mentioned earlier, the impact of the [indiscernible] program was immaterial, both overall and during the quarter, moving on to the renegotiated portfolio. It continues to operate at very comfortable and appropriate levels, although there are some specific effects worth mentioning. I had previously indicated that at some point, the nominal figures would naturally tend to increase. This is expected given the significant derisking process we have carried out over recent years. However, we also have specific one-off effects such as the inclusion of the disenroll portfolio. out-of-court restructurings and other restructuring plans that have recently been approved are also included figures, among other items. Therefore, this increase is driven by specific and isolated factors.

What matters most is the relative indicator, which remains very well behaved and once again demonstrates the strength of our portfolios. Turning to noninterest expenses. The news is very positive. Commercial and administrative expenses declined by 0.5% year-over-year and increased 3.2% in the first half of 2026 compared with the first half of 2025 remaining below both inflation and collective bargaining adjustments. Looking at total Brazil expenses, growth reached 3.1% year-over-year and 4.1% in the first half of 2026 compared with the same period last year. This once again demonstrates our cost discipline across the organization and the meaningful progress we have made, particularly in those segments where we needed to improve efficiency in order to become increasingly competitive.

This is a direct result of our management strategy, and we can certainly discuss it further during the Q&A session. Overall, I'm very pleased with the progress we have achieved on this agenda. As a result of this strategy, the efficiency ratio reached 35.5% in Brazil in the second quarter and 37.4% on a consolidated basis. Looking at the first half comparison, we continue to make progress, improving from 35.7% in the first half of 2025 to 35.2% in the first half of 2026 in Brazil and from 37.5% to 37.3% on a consolidated basis. Therefore, I'm very satisfied with the efficiency ratio of the institution as a whole.

It is also important to note that all expenses are included in this metric. There are no additional expenses outside the figures presented here, which further reinforces the strength and quality of the results we are delivering. All of this ultimately reflects our capital generation capacity. We generated 0.8% through earnings retention during the period we had a 0.3% reduction related to dividends and interest on capital provisions and a further 0.1% reduction from risk-weighted assets.

As a result, we ended the quarter with a common equity Tier 1 ratio of 12.3% and a very strong and solid capital position with further growth expected, which should allow us to have our traditional discussion regarding additional dividend distributions at the beginning of the following year. This clearly demonstrates the strength of our capital generation capacity. We also report additional Tier 1 capital at 1.5%. It is worth noting that the actual figure is 1.7% and but regulatory limits restrict the amount that can be recognized, which is why we present 1.5% here. This results in a very solid Tier 1 capital ratio and reinforces the strength of our capital generation base.

Finally, regarding my comments on guidance, I have 2 observations to make. We maintained the previously disclosed guidance ranges, including loan portfolio growth, NII with clients, NII with the market, cost of credit and noninterest expenses. The only change we made was to commissions and fees and to results from insurance, which, as I mentioned earlier, is closely linked to the level of economic activity. We revised the expected growth range to between 2% and 5%, whereas at the beginning of the year, we expected growth between 5% and 9%. We are making this adjustment to better reflect the trends we have been observing.

If we see positive surprises in economic activity or attractive market windows, we will naturally seek to capitalize on them in the best possible way. However, we believe that making this adjustment is the most prudent course of action at this point. The second comment I would like to make is not a change in guidance itself, but rather a comment on the position of the guidance. If you recalculate the implied results, I would ask you to consider the effective tax rate at the lower end of the range, which reflects our best current estimate.

If you run the math based on those assumptions, you will see that the implied bottom line remains unchanged, despite the revision to fee income and insurance results, assuming the effective tax rate remains closer to the lower end of the range, the bottom line outlook is effectively the same. This once again demonstrates our ability to provide visibility and deliver consistent earnings, even if the contribution by line item ends up differing from our original assumptions, we still have 2 quarters ahead of us with important challenges to navigate. The year is far from over, but we believe that we are very well positioned to deliver on our objectives over the next 2 quarters.

As always, should anything change, I will communicate it to you in a timely manner. Well, everyone, as I stated earlier, these are very solid results. We delivered quality performance across all lines. I believe it is extremely important to look at the bank's balance sheet and just as importantly, to understand where earnings are being generated.

Above all, what matters is discipline and consistency, allocating capital effectively, generating appropriate returns on allocated capital deepening primary banking relationships with our clients, increasing engagement, strengthening relationships and managing a transformation process that is occurring at a pace we have never experienced before, whether in terms of cultural transformation or digital transformation we have been able to execute and coordinate all these changes simultaneously. These are structural changes to our business models carried out with a high degree of discipline, strong execution focus and most importantly, with a realistic understanding of the many challenges ahead. both the macroeconomic and microeconomic environments require close attention.

The level of indebtedness among both companies and households in a restrictive interest rate environment requires caution. Nevertheless, we have been navigating this environment successfully always maintaining a long-term perspective. Thank you once again for your time and continued trust. I will now join Gabriel and Gustavo for our traditional Q&A session. See you shortly.

Gustavo Rodrigues: [indiscernible] Once again from our studio the Q&A session. We're going to start. And before him, this is a 2 language session. We're going to answer the questions in the language that they are made. . First question comes from Bernardo Guttmann, XP Investments. The floor is yours.

Bernardo Guttmann: Good morning. Good morning, everyone. Thank you for the opportunity for asking a question and congratulations on the results. Question about the margin with the clients. The quarter was good without the offenders of the first quarter, but any accumulative of the semester, the line is a bit below 5% against a guidance that starts at 5% and goes to 9%. The guidance was kept I want to understand where the acceleration is coming from. In the second semester, more volume, more mix margin of liabilities or any relevant own capital. in this account. And the [indiscernible] rate and the cycle turning, how do you foresee the behavior of the margin of liabilities from now on?

Milton Maluhy Filho: Thank you, Bernardo. Great to see you. Thank you for the initial words. It's a good topic, so we can start the discussion. Your question is more specific about the guidance, but I want to talk about the specific growth of the margin. we see the portfolio growing about 10%, maybe a bit below. It should, in the next quarters have a bit of a reduction, but it's still above the midpoint of the guidance. It should stay there. And due to the dynamics of growth, it should be in a higher threshold.

There is a Columbia operation that leaves now in July, BRL 10 billion of credit that allows us to grow in the previous phase, and we're talking about a delta growth. Second effect, the margin, as we see it today, it's growing below the portfolio. asked, why is the margin growing below. The explanation is the same one as the next quarters. First, when we look at the portfolio, we see the margin of assets of credit growing align with our portfolio. So when we open the margin, we have the credit assets. We have liabilities. We have working capital, and we have structured operations.

First, relevant information for you is that the margin of assets is growing aligned with the average results. In the margin of liabilities, we had in the previous years, an important acceleration with the interest rate hike and an increase also in the performance. We see a strong activity. So we have a relevant growth especially last year in the liability margin. And the price which is what we tend to analyze along with the balance. In this quarter, we have the base effect with the assets when we compare it with the previous -- with the first quarter, the first last year, we had the full capital and last year, we did in anticipation of the dividend.

So we got into the first semester with capital with a lower threshold. That's the effect on the working capital. fourth effect that really explains the volatility of the margin are the structured operations. LATAM doesn't really bring a lot of volatility. There is an exchange rate effect on the results, but the structure of the wholesale they have volatility effects. So when we look at the 2 quarters, the expectation is that the range still comprises our best opinion of projections. Of course, it depends on the activity and a series of factors.

Nonetheless, we can see some volatility in the margin in the third fourth quarter, but due to the seasonality of the structured operations of the wholesale that tend to be stronger in the fourth quarter. So when we do the projection of the margin, everything else constant, we believe that the current range comprises it's a range. It's not a point. It comprises that. So when we see the effect of the interest rate, it didn't affect the rate itself when we look at the implicit working capital in regards to the previous quarter.

But when we normalize the RAP effects and also in this quarter, the working capital had a lower effect which is selling the real estate that stays in the working capital, we see the rate of the working capital being aligned with the previous quarter. And remember, we do the long-term hedge of these operations, the liability and the working capital. Even in a cycle of interest rate, the pass through to the margin is not automatic. There is an temporal gap as the hedges are done for the longer [indiscernible]. So we depend on the activity because the activity of liability work together.

We have a cash pressure stronger and also the individual the efficiency, they pressure the liabilities, they grow the balance and the margin will depend on the dynamic of the interest rates, which depend on internal, external and factors. We have everything depending on the scenario inflation, the interest rates on the United States, so we can have a clear vision.

Gustavo Rodrigues: Next question Gustavo Schroden from Citi Bank.

Gustavo Schroden: Good morning, everyone. Thank you. Congratulations on the results. quite solid. I apologize, and I'm going to insist issue of the question of Bernardo, but I'm going to try and bring it towards the optics of growing the portfolio. If we analyze the bank, it has a few lines, and it's focused on the private payroll loans, small companies. So I wanted to understand what is the sustainability of this level of growth in these 3 main vectors of growth. The small- and medium-sized companies is exposed to a higher interest rate that we should have, even though we are expecting cuts, we are still going to have a lira higher macro scenario challenging.

The private payroll loan [indiscernible] is a product that has delinquency pressures. There is a cap in the interest rates so we need to understand the size of this market. Is it possible to keep this level of growth for the next 12 months. And the real estate -- when you have higher interest rates. So I really want to understand what is the dynamic of the portfolio from now on, to sustain this growth of NII that is more pure of credit and a follow-up on the structured operations. Maybe we should expect a contribution for the semester for the end of the year.

So if you can clarify what is the dynamic of the dividends that come from the quasi-equity operations that you have? They are linear. Do we have a seasonality here in because it's more concentrated towards the end of the year. So we wanted to understand those nuances.

Milton Maluhy Filho: Thank you, Gustavo. Thank you for the question. Great you see [indiscernible] let me try and bring forth a few relevant events. The SMEs we managed to grow, grow with quality with great dynamics, healthy of risk management. And we have a clear strategy for many quarters to grow in the government programs. It's a guaranteed portfolio. we've decreased in the government programs, one with the better ratings customers, we build a portfolio with them all throughout the years. It's a portfolio that has performed regardless of the challenging context and the cost of credit and results in a profitability level are being delivered very solidly for a segment.

So government still helps to withhold the delinquency at a lower threshold, but even the clients that are not in the government products, we're growing with quality. I've explained in the presentation about the delay to reinforce. We've seen a stability in these delays in the SMEs mainly because of the mechanical issues of the deadlines. Since we are to 0, we have a mechanical growth of NPL. The guarantees are exercised, depending on the program. It's maybe 180 days. So to go through the days before you execute guarantee. So there should be another 10 bps of growth and stability said well, given the information that we have right now, the scenario is dynamic.

If we have the deterioration, we're going to bring more information. The private payroll low, in the previous product that was -- you had specific agreements, BRL 40 billion market. So we had 30% of the market BRL 12 billion of portfolio. It's a product that we are learning to work throughout the years by the know-how giving it to the credit to the companies or the individuals. The private payroll loan called [indiscernible], is the junction of these 2 management. From the inception, we're focusing on public that is the target audience for this product. It's a public that most of them have an account, checking account in the bank.

We haven't operated in the open see because of the delinquency that is very high, the stability of the operation is still relevant issues and some processes that need to are. messages. We are growing with quality. We should stabilize the deadlines delays, indices similar to the previous product and we're going to see the nominal that are going to grow. Well, the portfolio grows a lot, obviously, it's not going to grow a deter it should stabilize, but we see great opportunities to produce with great risks and a dynamic of delinquency that is very adequate.

Most importantly, we are running, and I presented that we're running at about half of the indicator of the delays of the system, the data has been published recently. We're running with an indicator of delays maybe at half. So it's an operation that creates value, generates profitability. And most importantly, we service our clients with the products that are more adequate. This is the focus. I would not be a bank focused on the client. I want to offer a product that is cheaper. And it helps to explain why the individuals, they don't grow in the and the employees, we dropped in 7%.

And we grow -- well, there is an exchange, so we can avoid the overindebtedness of our clients. I brought the data that in our portfolio, our clients have performed and the delay levels have had has been very well behaved. So there was a comeback of the change of the mechanics of the real estate credit directed 20 compulsory and 15 free resources of the 20 of the compulsory 5 came back. So that generated an additional resources, and we have the real estate credit in the client vision.

How I service the client in the completeness of their needs in the best way possible and given the mix that we have between treasury and savings and all the hedges that we do, we grow with quality because we see that, that portfolio, we need to see it as the funding comes back. The model changes next year. We have gradual releases of convulsory, 1.5% for the next 10 years. At the limit in a time, you have 2 forces. One is savings more pressured. It just dropped 0.6% in this period. So it has a behavior that is stable. We have the order strength, which is the increase to the direction that will release funding to the market.

So we still see the capacity to grow pricing correctly. If you compare it to any other banks, and I'm talking about the private ones, our return for every real margin in credit is the best, given our relationship of treasury and real estate credit. We are very comfortable. Companies are depending on the capital market. We have a capital market that is more erratic over the last month, 2 months weaker, 1 more active, up ahead, it depends on the activities, which will drive our capacity to grow. Most importantly, we've been very disciplined in the capital allocation and returns. Very easy to grow portfolio with the wrong returns.

When we look at the whole portfolio that we have, vehicles, big companies, we've seen the level of appetite in the market that is higher. When we see the operation of the model of return with the allocated capital and we have an accuracy level that is very high in these models, we see that these operations are destroying the value for the shareholders when they're below capital. This is not the dynamic of our vision so we see opportunities of increasing in allocation. The portfolio will continue to grow with quality. We've grown in the companies and individuals and the best clients and the best ratings, resilient public, and we've grown margin of assets in the same level.

And what decelerated is structured and liabilities all dividends, your question. It doesn't have a very clear dynamic because every company releases there are dividends whenever they want -- so you have to have a fiscal base to be able to operate with these operations. So this is a care that we have the issues of the DTAs, which is very relevant. Secondly, typically, the companies give dividends at the end of the year, the end of the first. But eventually, there's going to be a structuring the client needs rescue and they're going to pay an extraordinary dividend. It's been erratic for us, this portfolio.

It's difficult to affirm how the margin will behave because since we are at a any marginal operation will generate volatility. That's why we are looking at the guidance, well, at the end of the year since the dividend is going to be paid, then we have more surety in our operations.

Gustavo Rodrigues: Next question. Beatrice, UBS.

Beatrice: Thank you for the question. Our question is about efficiency. In the quarter, it's a bit higher due to seasonality but we see a trend that is very good. Do you still see a space for an improvement in this index and if you ask what are the main drivers? Thank you for continuous improvement.

Milton Maluhy Filho: Thank you, Beatrice. Do you remember that in the previous quarter, we brought a view of the efficiency level in time, looking at a few segments of business. We had efficiency indices that were benchmarks and where we saw segments that are still scalable from the standpoint of efficiency indices, the efficiency and depends on the revenue. That's the focus we see that this is the best second quarter that we had the first semester that we had in the efficiency semester -- there is a seasonality. First semester is where we see less expenses and the levers are what we've seen the application of technology.

A lot of the fruits of the investments that the bank has done throughout the years. They -- their fruits and we get to an efficiency level -- that is very good. It's a virtuous trend, it's not from this period. If you have the longer periods of the bank, you're going to see this -- we believe that this has a potential of the plans, the level of detail, the discipline that the bank has in scalability is big and it's what we expect for the future. And I reinforce the words of Gabriel. Yes, it's very demanding, yes. [indiscernible]

Gustavo Rodrigues: Marcelo Mizrahi, BBI.

Marcelo Mizrahi: so thank you for the opportunity. Congratulations on the results. I want to see the service line with a review of the guidance, but I wanted to understand more of the dynamics that provoke this review. And what is the strategy of the bank -- about the issuance of credit cards, the lines of payment, the payments of companies, acquirents and even the insurance line, I wanted to understand the service lines up ahead. But looking at the dynamic of this activity, the mix services should have a behavior that is more cautious and lower growth maybe for tax year given the growth of cash that is potentially lower, these lines can be affected.

What is in here -- what is the change of strategy? The maintenance of the strategy, do you agree with this vision? Thinking about the mix of the portfolio, the strategy of the bank, do we think about this weaker line in the next quarters? Thank you.

Milton Maluhy Filho: Thank you for your participation. I think it's great that we can talk about this line because there was a change. And for every component of the services and insurance, there should be a small explanation. So first, talking about credit cards. Specifically individuals, there is a double effect. If we can summarize our strategy. First, throughout the years, we did a derisking important derisking in the portfolio in the income toward the less resilient public, we did a derisking that is very relevant. Looking here in the rearview mirror, we lost marginally revenue we saved important volumes of loss of credit. So the strategy was good.

Second, we've been ever more focused in the high income which is where we're growing the portfolio. And when we grow in these publics, it's a product that is clearly more expensive. We do a reduction of payments monthly payments. So we reduce the friction, and we are generating an operation that is completely dedicated to the vision of lifetime value engagement with the client, reduced the friction of the yearly rate, but the rewards are more expensive.

We see the players using the credit card as a cost of acquisition of the client making it more expensive and in our vision the public demand, better service with best conditions and in the standpoint of the vision of product and we have the exchange in an adequate rhythm. There is a strategy with the services and insurance, a great deal of the growth has been financed with the portfolio with the interest rates. And we are using the product of credit card as a finance for the consumption and not as a product for the client that has a more deteriorated situation and has a novo draft or the payment of the credit card.

There is a series of -- we're increasing the elasticity for the high-income clients. And we're doing this in a very material way. So this component has to be in the context of the credit card strategy, but it's in the margin of the clients. It's not in the revenue of services for the credit card. The administration of resources, is very important. The per fee, even though there is a more difficult market, we are the second asset that has a good performance relative, but it wasn't good for everyone. Again, so it means that an perfect comes in the second quarter. In the fourth quarter, we had a lower performance in the third quarter of last year.

So it's a risk management dynamic. We hope to be in the correct side even though with the volatility is difficult to generate per fee results. And on the other hand, we are growing the balances. And the rates are kept and that generates resources for administration. And also the consortium has helped a lot. When we talk about the investment bank. When we see ECM M&A stopped [indiscernible] Fixed income is a better month in June. But we have to remember, we like to look at the operations of the bonds and real estate, specifically in the rankings, joining what is origination and distribution. As you can see, we are still the leaders with a big advantage.

Distribution and it shows that a lot of the origination we distributed in the market. And we don't do those operations exclusively for balance. We do it by the good dynamic of the capital markets and the operations for the distribution of the market. And this is an important component to see because these operations when you see the result all in, which is the spread of credit loss fee that you get. And then we've seen operations in the market that are very much below the cost of capital. So a great deal of the operations that we lost, we lost because of price because the operation doesn't return cost of capital.

And it's been years operating, it's not difficult to do the calculation of capital allocation and return the operations that come between 1% and 12% that destroy value in the vision of the client, but there is an important innovation that depends on the dynamic of the market, and it depends on the higher risk. These returns that I'm mentioning are considering the fee which is recognized again. So the risk that you recognize the risk that you run is big -- recognize big risks and the duration of these portfolios might be 7 years.

So you have that tied down for that time. have an asset of low profitability because it gives 12% of return, considering 12 an ever seen operations below that considering the fee. So that dynamic is bad. You recognize a fee, you do a big result. And eventually, you might be recognizing the operation with a lower profitability at the long term which is dilutive for the profitability. The other one, we try to be very careful with the credit looking at the operations that we will lose because of appetite. It goes through any reasons, but sometimes we don't do any -- some operations because it affects the market as a whole.

When we go to insurance, we've had an important component for growth of the operation of the core, the bancassurance is doing well. What doesn't mean that deadline is exclusively for our bancassurance. It brings reps and other effects, you might have some volatility there in the early. And quarter-on-quarter, the patron the equivalents, we have public data and that's been displayed and this is clear. So we can grow with a lot of quality. We've grown in the year-on-year the premiums issued are relevant and with the numbers very well behaved. The government has. Social security has an important result as well. So looking up ahead, so it depends on the activity, but every line has a different strategy.

It's important that we have that vision of the client and companies I didn't talk about the flow of receivables. It's important that we brought ready in-house in the results of [indiscernible], there is a double effect. First, the mix we grow more in the wholesale than the retail, which affects the results. Secondly, the integration of the bank to the business, so we don't look at the vision of the product, we look at clients. The floating in the business of ready, it's not in the slide is where the margin will decline.

It's an adjustment that we should do ahead having a clear view of the whole and the big offender are the packages of companies, tariffs that we are reducing directionally. And the objection of this reduction is to remove the friction, increasing the lifetime value and creating long-term value. So we see the rates of engagement with the packages. And the individuals are dropping. We're generating a result that it's 1/3 of what we generated in the past. When we did the transition without being the bank more efficient, more focused with the client that for the long term is very relevant. And for the future, it depends on the activities.

Let's see how can we grow in this and briefly we will be budgeting in 2027. Post election, the space of the interest rates, they are going to facilitate the opening of some of these on.

Gustavo Rodrigues: Now we have our Yuri Fernandes.

Yuri Fernandes: Well, the profitability growing less in portfolio, so quality and return of results. But I wanted to go back to asset quality. This presentation you commented in I just wanted to know on the 150 for the individuals and SMEs. And there is a seasonal improvement. And a part of this level, you explained, which is with the government programs. But even the individuals, I shouldn't have a lot of effect on that it reflects about it. It's not a vertiginous drop. It's going to be 10, 20 bps, and it's flat. So I want to understand is if you're comfort with the asset quality, well, things are not going to improve a lot. There is a worsening.

I know that Itau has a better balance, you are more prepared, but we are concerned are we going to see any levels of worsening or no. This is a scenario of comfort, stability to understand. And if you can explain what happened with the 15 to 90.

Milton Maluhy Filho: thank you, great to see you. First, I believe that what you've held that I tried to transmit during the presentation, you capture it very well. Evidently, the scenario, if we look at the previous quarter and what now the delays that are published in the products, we see a relevant increase with the over 90 days. First information on our side. We didn't change. At any point, our policies of write-off for any product. The 4966 gives you liberty, but we've kept it as is expectation to take the clients write-off, didn't change. We don't do that for provision or using this degree to freedom for that. Number two, the derisking of the portfolio that is relevant was done.

Today, with the margin, we've managed to grow in a relevant way with a more resilient portfolios with the natural with the individuals and the company's wholesale retail that has brought a lot of important results. What is the test for the short-term delay. If you go back and look at how much we've grown in the first quarter in regards to the fourth quarter of the last year in the delays -- short delays, you're going to see that we grow much less than what we grew originally. So you see there we've grown 23 bps. It was much below we've managed to grow.

So seasonally, we see a recovery higher with short-term debt because the first quarter seasonally is higher because of that. so we don't expect to see it. But since it was lower, only 23 basis points and removing 324 is the best indicator of the series, then we ran at 50 bps 60 bps in previous quarter glass in the subsequent quarters. So there isn't any signal. It's more difficult. We've worked with the indicators, but no signal of concern for our portfolio that part with the information that we have now, the income that is higher, interest rate is higher. There is an over offering of credit in the market.

Over the years, we are very disciplined to grow in the correct way, but we are very at ease with the indicators. You can expect stability. These are volatilities variations that are miniscule. So no type of concern. If you look at the cost of credit, the portfolio is very well. If you see the renegotiated portfolio that grows in this quarter, we have 2 important explanations. First is the draw up, the program of the development. And secondly, in the renegotiated portfolio, we have still legal proceedings of last year, and you can only consider renegotiated once it's been -- the plan has been implemented legally.

So when you look at the provisions, the creation is stronger now for the second quarter because it's seasonal. If you go back to the previous quarters, it's behavior very similar from the rollout for the short to the lung, it grows in creation. There is a mechanical effect. We don't do provisions with the creation. We do expect a loss some the delay. In short, we anticipate the first quarter and the second quarter, we don't see that effect the coverage over creation that is a wholesale as a whole since we have guaranteed products so they demand less provisions.

So whatever you see, we are very comfortable with the indicators of credit don't see in that any type of message. Our best estimation is stability. We don't have the best estimation for the individuals and the -- that's why individuals for the companies and SMEs, we should worsen basis in the next quarter and then stable in onwards. With the information available now, it can worsen but it's not what we are saying. And in general, without the delays and we should bring in the next quarter, which helps to bring the indicators of the market. And our indicators, it's clear how we've distanced ourselves from the market.

The mouth has been very open, and we are consistent with the growth of portfolio that is very adequate and the long-term view. That's a message.

Gustavo Rodrigues: Now for the next question, Renato Meloni, autonomous. The floor is yours. Renato Meloni [indiscernible] in a broad question. If you can tell us, Milton about the cycle of credit in the industry in the second semester and getting into 2027. So you have -- how much is that helping with the interest rates in 2027. Well, with the previous comment, if you have any deceleration with the growth and the conversion for the guidance, where is that growth coming from per the guidance? Maybe you're going to get above the guidance.

Milton Maluhy Filho: Thank you, Renato. The cycle of credit, we've had it for many years will manifest differently from the different segments and the different products in every segment. So the choice of how to give credit in a long term and the management of portfolio is vital for what we are delivering. Because when we see the portfolio, you look at guidance, you look at macro, you look at the current conditions. You see all the models, and we had great results. We've advanced in artificial intelligence and an importance important results for the credit management.

The cycle of credit, we've seen a compromise of income government programs that are various of nature that relax had an important impact in our portfolio is immaterial, but it's 1.5 billion renegotiated, we presented 002 with the cost of credit. But for other players, probably the impact is given the share of the program and given the public with the -- which is less of our profile, and we also work on that pro -- so the cycle of credit will be challenging because the United States, possibly two hikes on the interest rates, the curves are going to be happening, there's going to be pressure.

The premium of the risk for total short term is well priced, possibly a cutoff of the meeting, which is the base in area, but it depends on the United States. Because if the interest rates are higher, then naturally, that will pull the exchange rate and that will generic will difficult actually to work of the Central Bank. That remains to be seen. So we see that these programs are helping, but there are one-offs or not forever. So nothing substitute the discipline of risk management. What we see today is an excess of credit given to the market is an excess of regulation that opened the market in a relevant way. There is a lot of players operating.

There is a lot of credit for the growth of credit is in the Well, the clients are over in that the clients had 4 or 5 credit cards. Now we have 5, 6 credit cards for individuals. So we grow the resilient clients, we help them to do that transition in as very possible. But it's a scenario that inspires. For 2027, we still need to understand the real capacity. But now your final question is, why don't you see that you have a better condition the balance is higher, so we can grow because then we're going to get the mistakes on the long term. So we need to have that discipline. That discipline has brought us here.

So once you lose that discipline because do you think that you need to grow, either to deliver results or to grow the top line, you deliver everything in the PVD thereafter. That affects the capital and worsen your capacity to give credit again. You're in defensive and you decrease the appetite. So we always want to be always on, giving credit with quality, but with the clients that are more resilient, always looking at the longer. But when we see the market growing rationally, we always need to make a decision. We lose the market share or if we are going to lose market share or money, we'd rather lose market share.

So this is the adjustment of the portfolio.

Gustavo Rodrigues: Thank you, Bernardo. Now Daniel Vaz, J. Safra.

Daniel Vaz: Good morning, [indiscernible]. Congratulations on the results, the stability, the cost of risk simply to a bank that is always predictable and stable I wanted to go back to my question, efficiency indices. We've heard with Milton and I wanted to understand the management of the cost I hope that is very far away from that, but there is a scenario where your revenue growth single digit, how much management could you have a cost contingency to keep the ROI. What limits the cost of cost? Is it more institutional, regulatory or simply is a deliberate choice speed of investment, crossing with your revenue, and looking at what we are doing now.

You have a review footprint how much ahead that has AI applied to your business. Thinking about what was done from now on, and now you have 100% support of AI or do you still pay that? Or is that being supported?

Milton Maluhy Filho: thank you, Daniel. Thank you for the initial. Well, I'm going to see the last comment that I wanted to do is the first cost is what is in our hands. Of course, the revenue, we have a production, which is the mechanical, the portfolio and when I look to the future, the revenue is uncertain. It depends on activity. It depends on delinquency and so on. The cost is under matched. We decelerated importantly with the cost of the growth without foregoing the long-term view. We're never going to kill the future. We are always going to generate value for the clients investing in experienced digital experience in delivering a bank that is ever better for our clients.

Opening new businesses, doing new fronts and all of that we're doing, but we can do both. We can invest in opening the space for that investment. I don't have a silver bullet. It's a series of initiatives that Gabriel has done with the Executive Committee and the bank a deep work, all the levers, mapped initiatives. So that's where we're going. Certainly. Of course, if we have technology or any other way of accelerating the process, we will do so. We are careful with the discipline of the tokens we are never inhibiting innovation, how we're going to do the intelligent management. And so but efficiency for us is a man truck.

It's never as important as it's been now. So with the segments that we can in competitiveness, and we can advance with the market, we have 5 percentage point advances with consistency. We're going to continue to reduce the retail adjusting the cost of service, so we can be more competitive with the digital retail, given all the investment that we've done in technology and transformation of journeys, which allowed us to service our clients with the best digital experience and just I'm going to take a step back. In the last month, we had competitive NPS of 18 points produced by prison, which shows the competitive NPS for the market for the winner of the digital experiences.

We closed a gap, which was 18 points through these years with the investments and the digital transformation. -- we are ready to capture the benefits of the digital Gabriel can give you more information.

Gabriel de Moura: I'd like to answer starting with your question about the results. About the predictability about the stability -- it shows how we're doing thin. -- at the end of the day, not difficult to grow the credit portfolio -- the consequences of what later is part of the decision-making process. So having a cost in a way that is sustainable for the clients with a series of investments that we have to do today to create value in the future. So the efficiency level is very important. It's an engine of competitiveness of the bank. But at the end of the day is the maximization of values. This is what we can do better for our shareholders and our clients.

There isn't one initiative. AI is a lever that is important we are implementing. We are bearing the fruits all. We have initiatives that we're doing at the same time for you to do this. It goes through expenses. The AI expenses in the bank will increase, but it generates efficiencies will generate revenues. So it's [indiscernible] different from all the transformation that we had with cloud before. Its expenses have increased, but you generate the development of the privacy for the efficiency of the processes and the bank as a whole.

The answer Milton is very complete, but we are doing the best that we can do with the times that we -- that is sustainable, and we can generate value for the shareholders.

Gustavo Rodrigues: Thank you. We are going to switch in English as we have Tito Labarta with us from Goldman Sachs.

Daer Labarta: Great. Thanks, Gustavo. Milton, Gabriel also on the strong results as usual. I also want to ask you a little bit about the industry your position in the industry, you're delivering about a 26% ROE in Brazil at a time where a lot of your incumbent competitors are struggling to do double digits, right? And there's concerns about the credit cycle, growth slowing, high interest rate environment? And how do you think about that competitive dynamics because that could create some incentives for some irrationality perhaps from some of your competitors to try to improve their position relative to yours. And we saw some -- maybe some pressure on fees, maybe that's related to competition.

But how do you think about the competitive dynamics? We also recently saw there was an index that rank as 1 of the top 2 banks in Latin America in terms of -- on the one hand, I think the leaders globally typically increase the gap relative to the large, right? Is that a scenario that we're seeing? Or could competitive dynamics change? And could they close the gap to some extent? How do you see, given where we are in the cycle, given your position and given where your competitors are today, your ability to sustain these levels of profitability and maybe some of the risks to that?

Milton Maluhy Filho: Thank you, good to see you. Thank you for your initial comments. So it's important to this date at the very beginning that we have many competitors in all the segments that we operate. So if you go to the wholesale business, you have Itau, then you have incumbent competitors, other competitors for all the rankings and competitors for credit, for cash management for derivatives, for everything. Then you go to the wealth management, then you have other competitors for investments, for asset management, so on and so forth. Then this is the same rule that applies for all the other segments, okay.

So we have -- when we talk about competitors, I think the first comment I'd like to say is that we have a huge respect for all of them. And I think all of them are doing their homework, everybody trying to compete to be more competitive in the long term, making their investments, trying to grow. Everybody has a budget. Everybody has a board. Everybody has incentives. So this is life as it always worse. But then we have to segment a little bit to understand, I would say, competitors behave. First of all, you're right. We've been able, fortunately, to deliver 2 digits and a strong plus return on equity in the last years.

And we are always trying to deliver the best value creation for our shareholders. And it depends a lot of cost of equity that today we pretty much said at 14.75%. This is where we believe our cost of equity is set, okay? So whenever we are generating at 14.75 plus, we are creating value to the shareholders. If we are operating there and less than that, we are deploying capital in the wrong way. So this is the discipline we have. It's true that whenever you need to show some results, you try to grow fast and growing portfolios and to underwrite credit in a rational way. we wouldn't be doing that because I believe this is not sustainable.

And whenever we see some irrationality and it's happening in some segments. We give one step behind and say, that's okay because it's not sustainable. And you know that for a few months, you will see that more clear. And then after that, you will see the market being disciplined again. Why is that? Because then you will show your profits or your revenue growing, but your profit will grow, but your return on equity will be low. And so the stock will be at the end of the day, looking for the capability to have to create value to the shareholders. So this is very, very important for your price book and also for your price earnings.

And the other thing that market will be looking at is the tangible equity of every institution because the level of leverage you get when you have a small tangible equity, it's a huge leverage. It's not made for make mistake because if you make mistakes in credit, you have just a small portion of our equity real capable to absorb losses. So that's why we believe it's not sustainable. Otherwise, you have to raise capital. in the market more and more. So what we are seeing is that there is a rationality in some segments. This is not enabling us or preventing us to grow. We are growing and growing with discipline.

But when we see that, we give a step behind and keep doing the way we believe for the long term. So this discipline is key for the long term. So when people ask me, what is our Vantage different that you see when you look to your market is the discipline in allocating capital. I think this is for many years and will be for the coming years key. But we see room to grow, we see room to grow our portfolio. So the strategy, the experience is not only a matter of price. Clients are looking for better experience. Clients are looking for a full bank that offer you all the products.

There is competitive, of course, but has a journey, a digital journey that is excellent. So this is the way we are offering the bank to our clients, and the discipline will be always here. So let's see, in the coming quarters, and time is time. So let's wait and see how sustainable are those approach.

Gustavo Rodrigues: We are going to move back to Portuguese because we have Eduardo Rosman with BTG Pactual.

Eduardo Rosman: Let's go with the credit cycle and see your opinion. How do you see the system being prepared for a crisis economic one. The market changed a lot. The companies, the Capital Markets Day multiplied. And for example, the industry, there is BRL 800 million. That dilutes reason on 1 side, but it causes changes. And we don't see how the capital markets would react to a crisis. if they would go to the same direction, the individuals, they've lost a lot of shares. We have platforms. Everybody wants to be a bank every today. So how do you compare with the previous crisis, and how do you see the system for potential crisis?

Milton Maluhy Filho: Thank you, for the question. When we see the current scenario, Meadows. There is a lot of changes. Pass-through volume to correct system [indiscernible]. Well, we have the volume of credit with the financial system. We have to look at the banking. Well, the volumes are very relevant. And today, we have at least 2 its in credit -- corporate credit in the system. And we've never had capital markets that is so relevant. This is great because the companies they have access to the market. to bank to credit, long-term operations that in the past were public banks now the market can absorb.

But we're going to see -- if we see a relevant crisis of credit, then there's going to be relevant challenges than in the past. Last banks and capital markets discussing. We've had a few cases, we've managed to somehow negotiate in a rational way with all the participants, but it's always a challenge. Second point audit Regulation is key. And today, the amount of players is very high. So you have a market that is supervision that Central Bank does their work. They also have their budgets, and we are in favor of increasing the budget for the Central Bank. This is the same thing as giving credit, and we don't have the structure [indiscernible].

Well, you open the market and you don't have a supervision. Again, follow up on the evolution of the market, not by the speed, but the quality and the limitations, the physical limitations. In fact, that's an important theme that we've discussed. We defend the increase of the budget for the Central Bank, so they can supervision. And then is the unsupervised. The new banks, the newcomers brings the operations to the balance but they distribute to the fund. A great deal of the risk goes back there. So these are capital markets, but it's a risk. It's almost a shadow bank that we have low visibility to what is inside the findings.

And when you have a situation of stress who is the owner of the receivables, these are situations that come up, and we are going to have to deal with that well. the compromise of revenue is very high. The indicators of delays, above 90 are going up. We have to see the data of the market and the level of credit that was distributed in the market is much higher than the market could absorb. So today, it's very easy to have a credit card. There is no annual fee, you can have 6 credit cards. You going to pay the -- you create the effect of this sudden death.

And then you go from 1 to the next, and then you leave the bank that has -- that is the main one. So the scenario in the individuals, SMEs are very pressured. The level of interest rate is very concerning and this difficult capacity of the companies of investing and paying in the agribusiness has its challenges, perfect storm. The price of commodities, the price of fertilizer logistics with a work, several signs the destitution more tenant margin. Now market is liquid. Several actors operating internal usage coming to the funds, the first marketing to the market relevant and can generate an impact -- then we go through the dynamic of prices.

There is volatility in the spreads of credit but there is important thresholds that are competitive. So the market has absorbed those that use the window have used it well. And if you need to sell it because of a cash flow, there's going to be a hit that is very -- so that's where we're going to have to follow. But this scenario worse at the margin, and we're going to have to see the unfolding of the structural interest rates and the economy activity. We cannot depend on the transference and the public expenses. We need to bring private investments that in these levels of interest rates, it's more difficult.

Operator: Mario Pierry from Bank of America, the floor is yours.

Mario Pierry: Congratulations on the results. Not going back to services. As you explained a lot, there is the review of the guidance. But we need to understand. How is -- what that has to do with the migration. We've talked about the migration of the clients for the on equity. In the revenue, and we're going to have the cross-sell of products. And we have that review of the revenue that we see that the migration occurred but the benefits are not as good as we expected. How do you see that migration and the benefits for the results of the bank. Brigade Committee you're asking,

Milton Maluhy Filho: Thank you for the initial comments. And no. That's not the explanation. We're very positive with the evolution of the migration of One Itau that we've done throughout the quarter First, we concluded the migration second year NBS levels above 80%, very strong with a small fraction, 99.3% of the clients. migrated with a digital experience that is very solid, and we managed to get 18 points of NPS in regards to the leader of the digital bank. The new products, more than 20 products launched in the period with a level of activation that is very strong. So transference of limits, the management of expenses. There is an adjustment of limit of the credit card.

So there is a lot of products that has important results. We quadrupled the open [indiscernible] the volume of accounts in the bank. Over 70% of the clients have Three products of the bank. So we've managed this. So the checking account is relevant. And here, there are opportunities to grow in credit with the client that you knew -- there is a relationship with quite didn't explore a full bank with the private payer of loan or whatever. That is in the margin was decline. It's in the growth of the portfolio. It's not in the margin of services. Credit card is there of this product. of this public.

And in this public that we migrated, we did the derisking and it affects negatively we are reducing a big reduction and somebody doesn't grow. So it's a 1 that affects marginally this effect with the portfolio of services. So [indiscernible] is doing well. opportunities for growth in the -- in the individuals, it's growing very well. The transformation of this you when I do an analysis of the last 7 months. It's great work with solid results, quality growth, everything that we discussed in Itau day, and we've communicated has been executed in an impeccable way.

The results are following, we see the profitability generating value segments that were more deficit the difficult Ita Digital is the capacity of growing in the niches with the segments. With quality, and we have to get in practice 67% of the initiatives that were marked are going to be executed until the end of the year. We should do it. And the growth should come in the subsequent years. We're very excited about the evolution of the real estate then the individual side where we had structural programs that were very relevant. We've managed to execute it very well. I'm very excited for the future.

Gustavo Rodrigues: Thank you, getting back to English as we have Carlos Gomez-Lopez from HSBC with us. Carlos, please go ahead.

Carlos Gomez-Lopez: Gabriel, Milton, once again, congratulations on the results and the consistency of the results, which is if I wanted to us about 1 of those things that are unchangeable in life, which is taxes. Do you differentiate yourselves not only for the higher profitability, but also for being the bank with probably the highest effective tax rate. But when you think about it from the policymaker point of view, the system has probably paying less taxes today than they were before. And with the amortization of the TAs possibly even more. Are you concerned that in the next administration, there could be a pressure for the industry to pay more?

And in that sense, what can you do to protect yourselves, either through Febraban or something else? And where could you see pressures coming for a higher accretion.

Milton Maluhy Filho: Yes. Thank you. Thank you, Carlos. I think first answer of your question is that there is a huge stock in the market of DTAs and tax credit. So the DTA and the tax credit is a tax that was paid at a certain moment or you have to deal with that when you go and you move for the coming years. So this is relevant. I think at the end of the day, whenever a bank has a situation of tax credit, to avoid having losses in the tax credit that will reduce from your capital base. The first thing that a bank should do is to avoid doing operations that reduce our tax base.

So this is one thing. The second one is to reduce the IOC. So you are not obliged to do 100% of the you can do up to, but you need to have a positive tax situation to make it happen. So I believe banks will need in a certain moment, to adjust AIC. The third 1 is the payout. So I think banks have the capability to reduce payout as well to retain more capital if for any reason they will face difficult with the tax credit. But the IOC is there. I don't see any discussion about it. It's not only for banks, but it's for the whole industry.

It's true that our system, our industry retains a huge amount of capital in the balance sheet. And why is that? Because it's regulated activity. So the Central Bank requires that for you to make the credit and to have a portfolio the size we have, you need to retain capital. And this capital that you retain at the end of the day has the benefit of but you have, on the other hand, a very high level of tax -- corporate tax rate for banks in Brazil, which is 45%, and there is an increase for financial companies in the consumer finance and also for IPs in the recent years.

So I think there is no risk of this discussion because it has to do with the level of capital, and I think banks at a certain point they will have to reduce the IOC. It's not our base case. We don't have any issue with that. But I think the market might need to reduce IOC in order to avoid having losses in their tax credit that will reduce capital. I think this is something that we might see, and this will necessarily increase their effective rate.

Gustavo Rodrigues: Now we go back to Portuguese and Eduardo Nishio. Eduardo Nishio Good morning. I have a question that is for the efficiency level. I wanted to hear from you. From your standpoint of cost and revenues, if the number of employees is dropping very high, was 5.5% in the year. And in the branches, we have a drop of 20%. So I need to know until when this process? Where are you in this state of making your footprint adequate? Do you see more space for reduction? And in the part of revenues, which is difficult to make it tangible the superapp. If you can share with us a few numbers of cross-selling. Do you have those numbers?

To TELUS and the launching of the GenAI with a super app? What is the proposal you expect from this launch?

Milton Maluhy Filho: About the first part of your question, when we look at the number of branches, we always do a review of the footprint from the client number. So demand by the branches is dropping. The flow is for what it was epidemic. The bank [indiscernible] there is a digitalization and we are always reviewing our business model. Our value proposition sees how we're going to service the claim. What is digital ways all what is in the digital branch, what is in [indiscernible] what is the federal? That is part of the process.

We don't give guidance. on the amount of branches or head count Naturally, the turnover -- natural turnover at the bank as we understand that we can absorb, being more efficient and at the same time, adjusting the value proposition and the business model. For the clients, we're going in the first month we did a review. But we have a review of the proposal of the value and -- all of that is being discussed. So we have a commitment with the client in the business model. And we have to adjust it as necessary. This is what we are trying to do generating the minimum fracture and with the most care about efficiency.

We talked about the super the migrated clients, BRL 50 million are migrated into the process in -- we have 70% of the clients with 50% of the products and the opening of the volume of accounts is gigantic, which shows our capacity of delivering value depending on the profile of the clients. So there is a 1 size saw the benefit of integration is not only for the migrated clients but for the shareholders because the dedicated apps, we are -- we have a better experience than the superapp. So when we integrated, we have -- when they are in a super b, they have a hub of credit cards that is much better than what we have before.

So now these clients are part of our ecosystem. They are part of the life cycle. They are part allowing the client to understand the full bank and it's not [indiscernible], and we have solutions and for the client as they have needs so that this growth is done, obviously, natural. We're very excited with the results and certainly an important growth of the individuals servicing these clients better. So first, we did the foundation of creating guardrails foundation of how we're doing the artificial intelligence to interact with the clients. We have a responsibility and the institution, we cannot have the model with the -- without the protections. We have scalable models at the right price.

And how can we take the results of the client in their own benefit -- we have to individualize the experience, and we can do that having the -- taking into consideration the DNA of the client. And here with the degree of privacy that the client wants, without having the knowledge basis. Well, to find we have the instructions and our policies in our culture, the HD has the culture of the banks. And they need to have clear guardrails. So how do we train these models so they can understand the clients and all the relationship with the bank. So without having a full bank in the past is not so in the back. It's not simple.

You're not a one-off shop, and you cannot make decisions making the hole, you give partial recommendations and not the best ones. You don't have the records of data we have in segments and we were always relevant investment credit and so -- how do we so fasten -- so that facilitates the understanding of the client in the cycle that they are. If they have assessment with the -- we have -- when can we offer? What should we offer until we get to the transaction. So you can have a transaction without involving the human. And that will clarify not only the doubt it's AI for our labor employees because it releases time.

And sometimes the commercial teams, they have to answer a simpler question, the model is going to do that. It facilitates so that the people have 3 more times contact than before it has efficiency in the amount of clients in the load of the teams, how many clients they have to service and it improves the experience because you have a first call resolution that is much better as the doubts are clarified. So we're very excited the first bank to launch this with this level of completeness and this amount of data and the models will grow with the clients.

We're very excited about the evolution and the command of the artificial intelligence, AI, it's a good position, and we are positioned and saying that I was always present at a bank and the brand itself. So now we're going to grow with the client. It's going to be a game changer in the experience. And it takes the organization for a strategy that is AI first, which is very relevant for the future.

Gustavo Rodrigues: Now the last question in Henrique Navarro, Santander.

Henrique Navarro: Congratulations on the results. The market has changed a lot. It's not normal to see a decision guidance. And the question is the new guidance, given the breadth of the guidance somehow reflects this estimation for 2026. But in the quickly the world is lines that are weaker in the guidance, if there is a mistake an expectation of review, what are the lines that should be more at risk. And looking at '27, maybe you would agree that the changes that are necessary. In January of this year, the side the sell side and the banks, we had an expectation of a good recovery of the cycle of credit.

And as things are happening, it's not going to work out. So I wanted to hear if we should look at 2027 with the growth of credit that is softer, and we just have to push these banking fees that is weaker for 2027. So giving us some color at the end of 2026.

Milton Maluhy Filho: Thank you, Henrique, and thank you for the comments. Last question, but a lot of energy. When we look at the [indiscernible] it tends to capture well what we imagine for the year. We have a guidance and we imagine that we are not going to need to review it, but we are pragmatic to review it whenever we have a better performance in the market. This is a good practice for transparency, so we can get to the number that we want. We don't give geographies or a point because it wouldn't be a point, it's a range. The new share credit portfolio it will grow reasonably, and we have 0.6 in the portfolio.

It's on the basis of the last year. And we have a selling of the portfolio that was done at the end of the day BRL 10 billion that are automatic, but again, the portfolio works very well. Margin with the client. If we annualize what we have in the first semester is a challenge that we have for the next 2 quarters, certainly. Today, we are running close to the floor than the midterm, the midpoint because of the effects that I commented with the liabilities that are very solid.

So it grows -- with the structured operations that has volatility and it might be a difference in the next quarter and the working capital that is very stable and growing, but it shouldn't grow at a very relevant way. And the margin of assets is growing. I'm not concerned. But the margin delivers. The cost of credit, you discussed I wanted to tell you that a bit to the left a bit to the right, our best expectation is should be closer than to the midpoint of the guidance. So even though if we have these questions, oh, it's worsening at the margin, maybe there is something implicit.

What we've seen in the wholesale that is more challenging in terms of credit, but we've done the provisions. And the message that I wanted to make it very clear to you is that, first, we do the provisions and then we discuss the profit. It's not from the profit to the provision. So if we had to come through a quarter that has a worse result because the provisions were worse. And I will explain the reasons and we will explain this.

So the discipline of having the provision balance, we don't forego, the balance has to be well provisioned and we're now going to -- we're not going to be under provision, either in individuals or the retail or the wholesale. We're always going to have the discipline of doing the provisions. Having said that, our best expectation is to close at the midpoint, close to the midpoint of the cost of credit. And the revenue of insurance, we did the adjustments. You see the results. We have a solid agenda as we've seen the level of mobilization high and the cost is very close to the bottom. When we see the geographies, we have the full year forecast.

All of that is giving me a level of bottom line. Bottom line is in line with the guidance previous guidance. But to the left a bit to the right, but I believe that the bottom line implicit 1 if it had a variation, it's very small. So this is what we are seeing. For 2027, very early to say because, once again, this scenario is very dynamic.

So we're going to start now with the discussion, we see the -- we do the discussions, but we are going to have a good budget for 2027 with a big -- we have the discipline of execution, and we're going to execute the best that we can, so we can share with you.

Gustavo Rodrigues: Thank you, Milton. Thank you, Gabriel. Thank you, everyone, that took part on our earnings calls. Now we close the Q&A session and our second quarter earnings call. Now I'll give the floor to Milton.

Milton Maluhy Filho: Thank you, Gustavo. Thank you, Gabriel. Thank you very much for your participation, and we really like this relationship with the investors and with all the states in we try to open as much as we can. The information with a higher level of transparency, predictability for any direction if we have to adjust below, we have to just below if it's up, well, we try to avoid surprises. Solid quarter in a very challenging scenario, delivering the results that we've delivered with the level of profitability and efficiency level. And transformation of the bank with credit indicators and the quality level that we delivered, it's not simple.

Really, this is the work of everyone mobilization level and a lot of capacity, not only the competency of the teams for the capacity of navigating the scenario and what brings us. This scenario is the discipline of capital allocation ratio Creation of value and long-term view. Discipline is key. Thank you very much. We'll see you briefly in other opportunities and for the [indiscernible] that are watching us. The result is for -- made by everyone. Thank you, and we'll see you soon.